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Retail Supplier To Pay $42,000 Under Settlement With PUC Staff Concerning Alleged Misrepresentations

Investigation Once Again Prompted By PUC's Oversight Director Receiving Retail Energy Sales Pitch

August 31, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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Discount Power, Inc. ('Discount Power,' 'DPI,' or 'Company') would pay approximately $42,000 under a settlement with the Pennsylvania PUC's Bureau of Investigation and Enforcement ('I&E') to resolve various alleged violations, including alleged instances of deceptive and misleading telemarketing, alleged billing of incorrect rates, and alleged unauthorized switches.

An investigation by I&E was prompted by the receipt of a sales call by the PUC's Director of the Office of Competitive Market Oversight (OCMO) which included alleged violations -- which is at least the third instance in which a sales call or mailer received by OCMO's Director has prompted an investigation of a retail supplier which resulted in a settlement

The settlement states, "On October 29, 2020, Daniel Mumford, Director of the Office of Competitive Market Oversight ('OCMO'), submitted a memo to I&E outlining his concerns with DPI’s telemarketing practices. Specifically, Mr. Mumford personally received a telemarketing call on August 24, 2020 and described the corresponding phone conversation in detail."

The settlement states as follows:

• "On August 24, 2020, Mr. Mumford received a phone call with a caller ID showing York, PA and which started as an automated/robocall advertising a refund on his electric bill. "

• "Mr. Mumford noted that after pressing 'one,' an agent came on the call and immediately requested that Mr. Mumford retrieve his PPL electric bill. While the agent did identify himself by name, the agent failed to disclose who he was calling on behalf of. "

• "The agent stated that he could provide a better rate fixed for 24 months, that Mr. Mumford would be receiving a reward card of $50.00 every month, that the supplier would be 'chosen by PPL,' and that 'nothing will be changing' on the electric bill."

• "Mr. Mumford was advised that he would be receiving a 'new, lower' rate of 8.29 cents. Several minutes into this conversation, the agent finally stated that he was representing Discount Power."

• "Mr. Mumford was then coached through the verification process and successfully enrolled with Discount Power. However, the verifier stated that Mr. Mumford was enrolling in a fixed 3-month plan at a rate of 8.29 cents, contrasting the information provided by the agent."

• "Additionally, the verifier stated that a $4.95 monthly fee would be incurred, which the agent did not disclose to Mr. Mumford during the sales call."

• "Mr. Mumford’s account was switched to Discount Power on or about September 8, 2020 and he received a welcome letter and disclosure statement from Discount Power dated August 26, 2020."

• "Mr. Mumford’s telephone number is on the Do Not Call list."

The settlement states that the telemarketing call received by Mr. Mumford on August 24, 2020 contained the following alleged conduct:

a) Calling an individual on the Do Not Call List;

b) Spoofing a York, PA telephone number;

c) Automated recording advising the recipient of a 'refund' on the electric bill;

d) Live agent not identifying who he was working on the behalf of upon first contact or stating that he was not working for the local EDC;

e) Agent misrepresentation that Mr. Mumford would be provided a better rate for 24-months when the verification stated that the agreement was for 3-months;

f) Agent misrepresentation that [sic] Mr. Mumford that the supplier was 'chosen by PPL;'

g) Agent misrepresentation that 'nothing will change;'

h) Agent misrepresentation that Mr. Mumford will be receiving a newer, lower rate of 8.29 cents;

i) Agent misrepresentation by failing to advise Mr. Mumford of the $4.95 monthly fee; and

j) Agent coaching Mr. Mumford through the verification process.

As part of investigating customer complaints, I&E also alleged the following:

a) Five (5) incidents where DPI requested a refund for the customer after an allegation of misrepresentation;

b) Two (2) incidents where customers alleged misrepresentation but DPI offered refund for the 'inconvenience;'

c) Two (2) incidents where DPI requested a refund after an allegation of misrepresentation and noted possible tampering with the recording(s);

d) Two (2) incidents where an agent was suspended and retrained after complaints of misrepresentation;

e) Two (2) incidents where misrepresentation and deceptive enrollment resulted in the termination of an agent.

f) Two (2) incidents where DPI improperly enrolled a customer as a 'winback;'

g) One (1) incident where DPI improperly enrolled a customer as a 'winback' but only offered to provide a refund if the customer stayed with DPI;

h) One (1) incident of enrolling a customer with dementia in a nursing home;

i) One (1) incident of enrolling a customer with dementia who did not have legal ability to enter into a contract;

j) One (1) incident of enrolling an elderly customer who did not have authorization to enroll;

k) One (1) incident of enrolling a customer who was unable to authorize enrollment due to mental capacity, i.e., mental disability/mentally challenged;

l) Two (2) incidents of enrolling a customer with incorrect information/possible slamming allegation;

m) One (1) incident of failure to cancel/drop account upon request;

n) Two (2) incidents of failure to provide renewal letters to customers;

o) Two (2) incidents where DPI provided and/or enrolled customers with incorrect rates;

p) Eight (8) incidents related to high variable rates and/or renewal rate where DPI offered and/or provided refund; and

q) Two (2) incidents of failure to bill correct rate

The settlement states, "In its responses, Discount Power acknowledged that there were at least seven (7) individuals who filed complaints after receiving a telemarketing call in light of being on the 'Do Not Call' list."

If litigated, I&E would have alleged, among other things, that the alleged actions of Discount Power and/or its agents resulted in the false or deceptive and misleading representations, including rates and savings. If proven, I&E would have alleged that such conduct would have violated 52 Pa. Code § 54.122(3) and 52 Pa. Code § 111.12(d) (multiple counts).

Had this matter been fully litigated, Discount Power would have denied each of the alleged violations of the Commission’s Regulations, the Code, or Commission’s Orders, raised defenses to each of these allegations, and defended against the same at hearing.

Under the settlement, Discount Power would pay a total civil penalty of $42,250.00, broken down as follows:

a) A civil penalty of $500.00 for each of the ten (10) identified alleged violations related to the August 24, 2020 telemarketing call received by Daniel Mumford, totaling $5,000.00.

b) A civil penalty of $750.00 for the thirty-seven (37) alleged violations relating to misrepresentation, incorrect rates, failure to drop the account upon request, failure to issue renewal letters, and unauthorized enrollments, totaling $27,750.00.

c) A civil penalty of $750.00 for alleged violations related to calling seven (7) individuals on the 'Do Not Call' list, totaling $5,250.00.

d) A civil penalty of $1,000.00 for Discount Power’s alleged lack of recording keeping (1 count) and nonexistent record keeping prior to 2019 (1 count), and a $750.00 civil penalty for the three (3) identified complaints within the last six billing cycles which allegedly contain no records of communications or a resolution of the complaint(s), totaling $4,250.00.

Discount Power will also undertake various remedial measures, including creating and implementing a robust customer complaint tracking system

In a statement of support included with the settlement, Discount Power said that, "Had this matter been litigated, DPI would have presented evidence to show that in many instances that are the subject of this Settlement, DPI and its agents complied with provisions of the Commission’s regulations contrary to the allegations raised by I&E."

"However, rather than expending significant resources to perform an in-depth review of each account on which I&E alleges violations occurred and then defend these allegations in litigation, DPI made a practical business decision to enter into the Settlement," Discount Power said in the statement of support

"DPI would have also advocated for the imposition of a lower civil penalty, largely due to its excellent compliance history in Pennsylvania to date. In addition, DPI would have contended that the Commission lacks statutory authority to enforce and administer provisions of the TRA," Discount Power said in the statement of support

Discount Power said in the statement of support that, "No allegations have been raised about personal injury or damage. Therefore, the consequences were not serious and this mitigating factor supports the negotiated civil penalty."

"No formal complaints have been sustained against DPI since it was licensed in 2012. DPI’s unblemished compliance record supports the negotiated civil penalty," Discount Power said in the statement of support

"Through the Settlement, DPI has agreed to create and implement a robust customer complaint tracking system, train its customer service agents on the new system, and promptly process and investigate customer inquiries, disputes and complaints. All of these modifications address concerns raised by I&E during the informal investigation and will improve DPI’s overall operations. In addition, consumers interacting with enrolling with DPI will experience greater satisfaction with the electric choice program," Discount Power said in the statement of support

Docket No. M-2021-3022658

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